<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
-----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------- -----------------
Commission File Number 0-9042
-------
MEDEX, INC.
---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-4441680
---------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
3637 Lacon Road, Hilliard, Ohio 43026
---------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (614) 876-2413
------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 23 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
As of December 31, 1995, the latest practicable date, 6,171,841 shares of the
registrant's common shares were issued and outstanding.
1
<PAGE> 2
MEDEX, INC.
-----------
INDEX TO FORM 10-Q
------------------
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1995
----------------------------------------------------
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
- ------- ---------------------
ITEM 1
------
Title Page
Index to Form 10-Q
Consolidated Statements of Income -
Three and Six Months Ended December 31, 1995
and 1994
Consolidated Balance Sheets -
December 31, 1995 and June 30, 1995
Consolidated Statement of Shareholders' Equity -
Six Months Ended December 31, 1995
Consolidated Statements of Cash Flows -
Six Months Ended December 31, 1995 and 1994
Notes To Consolidated Financial Statements
ITEM 2
------
Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II OTHER INFORMATION
- ------- -----------------
EXHIBIT
-------
10.1 Amended Medex, Inc. Key Employee Non Statutory Stock Option Plan
10.2 Amendment to Employment Agreement with Bradley P. Gould
11. Computation of Earnings Per Share
27. Financial Data Schedule
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
------------------------------
ITEMS 1 & 2
-----------
MEDEX, INC.
-----------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(unaudited)
-----------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
DECEMBER 31, DECEMBER 31,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $23,533,502 $22,376,351 $47,231,113 $45,458,490
COST OF GOODS SOLD 12,151,514 12,803,854 23,790,691 25,296,274
------------- ------------- ------------- -----------
GROSS MARGIN 11,381,988 9,572,497 23,440,422 20,162,216
------------- ------------- ------------- -----------
OPERATING EXPENSES:
Sales and marketing 5,578,966 5,462,668 11,308,303 10,284,956
Research and development 734,419 766,895 1,377,367 1,501,457
Administrative 4,068,960 2,915,591 7,529,760 5,816,477
Restructuring costs 833,479 1,674,262 1,074,730 1,674,262
------------- ------------- ------------- -----------
Total 11,215,824 10,819,416 21,290,160 19,277,152
------------- ------------- ------------- -----------
OPERATING INCOME (LOSS) 166,164 (1,246,919) 2,150,262 885,064
------------- ------------- ------------- -----------
OTHER INCOME (EXPENSE):
Investment income 72,778 112,244 124,748 170,798
Interest expense (44,110) ( 97,210) ( 63,975)
Other - net 39,044 46,257 ( 49,855) 116,357
------------- ------------- ------------- -----------
Total 67,712 158,501 ( 22,317) 223,180
------------- ------------- ------------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 233,876 ( 1,088,418) 2,127,945 1,108,244
ESTIMATED INCOME TAXES (BENEFIT) 95,000 ( 440,000) 852,000 439,000
------------- ------------- ------------- -----------
NET INCOME (LOSS) $ 138,876 $ ( 648,418) $ 1,275,945 $ 669,244
============= ============= ============= ===========
NET INCOME (LOSS) PER COMMON SHARE:
NET INCOME (LOSS) $ .02 $(.10) $.21 $.11
============= ============= ============= ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING 6,201,593 6,211,900 6,199,873 6,204,063
============= ============= ============= ===========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
MEDEX, INC.
-----------
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
(unaudited)
-----------
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JUNE 30, 1995
----------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 5,196,220 $ 4,911,074
Investments 345,000
Trade Receivables (less allowance for doubtful accounts
December 31 - $757,000; June 30 - $714,000) 18,439,865 18,506,153
Inventories:
Raw materials and supplies 11,482,230 11,495,702
Work-in-process 4,786,481 3,626,058
Finished goods 7,695,977 7,248,231
---------- ----------
Total inventories 23,964,688 22,369,991
Deferred income taxes 1,633,456 1,633,456
Prepaid expenses and other 1,333,141 812,925
--------- ----------
Total current assets 50,567,370 48,578,599
---------- ----------
PROPERTY, PLANT AND EQUIPMENT - At cost:
Land and land improvements 2,274,816 2,053,046
Buildings 19,695,334 19,504,336
Machinery and equipment 16,744,041 15,940,342
Dies and molds 8,760,162 8,226,919
Furniture and data processing equipment 8,949,683 8,285,376
Additions in progress 3,600,100 3,330,646
---------- ----------
Total 60,024,136 57,340,665
Less accumulated depreciation 24,958,477 23,028,147
---------- ----------
Property, plant and equipment - net 35,065,659 34,312,518
---------- ----------
COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED
(Net of accumulated amortization: December 31, $1,100,844
June 30 - $997,352) 4,769,489 4,872,981
---------- ----------
OTHER ASSETS:
Deferred income taxes 544,888 530,872
Other 2,141,783 2,206,581
---------- ----------
Total other assets 2,686,671 2,737,453
---------- ----------
TOTAL $93,089,189 $90,501,551
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
MEDEX, INC
----------
CONSOLIDATED BALANCE SHEETS
---------------------------
LIABILITIES & SHAREHOLDERS' EQUITY
----------------------------------
(unaudited)
-----------
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JUNE 30, 1995
----------------- -------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 502,537 $ 513,066
Accounts payable (principally trade) 3,196,682 3,797,582
Accrued liabilities:
Income taxes 1,706,651 602,209
Compensation and profit sharing 3,809,011 2,873,619
Restructuring costs 939,131 649,983
Other 3,157,412 2,807,811
----------- ----------
Total current liabilities 13,311,424 11,244,270
LONG-TERM DEBT - Less current portion 3,411,008 3,463,232
---------- ----------
Total liabilities 16,722,432 14,707,502
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock - $.01 par value
Shares authorized - 20,000,000
Shares outstanding December 31 - 6,171,841
Shares outstanding June 30 - 6,159,502
(net of 150,590 treasury shares) 61,718 61,595
Additional paid-in capital 42,601,923 42,460,256
Retained earnings 33,954,922 33,172,136
Foreign currency translation adjustment (251,806) 100,062
--------- -------------
Total shareholders' equity 76,366,757 75,794,049
---------- ----------
TOTAL $93,089,189 $90,501,551
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
MEDEX, INC.
-----------
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
----------------------------------------------
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
------------------------------------------
(unaudited)
-----------
<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL CURRENCY TOTAL
COMMON STOCK OUTSTANDING PAID-IN RETAINED TRANSLATION SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT EQUITY
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT
JUNE 30, 1995 6,159,502 $ 61,595 $42,460,256 $33,172,136 $ 100,062 $ 75,794,049
Net income 1,275,945 1,275,945
Cash Dividends
($.08 per share) (493,159) (493,159)
Foreign currency
translation
adjustment (351,868) (351,868)
Issuance of stock
under stock option and
purchase plans 12,339 123 141,667 141,790
------------------------------------------------------------------------------------------------------
BALANCE AT
DECEMBER 31,
1995 6,171,841 $ 61,718 $42,601,923 $33,954,922 $ (251,806) $ 76,366,757
=======================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE> 7
MEDEX, INC.
-----------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
-----------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,275,945 $ 669,244
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,100,466 2,129,463
Change in operating assets and liabilities:
Increase in trade receivables (113,746) (183,676)
(Increase) decrease in inventories (1,772,326) 2,347,882
(Increase) in prepaid expenses and other (469,210) (576,351)
Decrease in accounts payable (565,989) (115,706)
Increase in accrued restructuring costs 289,148 1,537,501
Increase (decrease) in accrued liabilities 984,075 (1,936,218)
Increase (decrease) in accrued income taxes 1,151,388 (592,523)
Other operating items - net 333,864 (58,875)
----------- ------------
Net cash provided by operating activities 3,213,615 3,220,741
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (2,895,035) (3,221,734)
Proceeds from sale of investments 345,000 5,000
----------- ------------
Net cash used in investing activities (2,550,035) (3,216,734)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of long-term obligations (62,753) (169,061)
Proceeds from issuance of common shares 141,790 59,980
Cash dividends paid (493,159) (490,497)
----------- ------------
Net cash used by financing activities (414,122) (599,578)
----------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 35,688 (18,121)
----------- ------------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 285,146 (613,692)
----------- ------------
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 4,911,074 8,604,455
----------- ------------
CASH AND EQUIVALENTS AT END OF PERIOD $ 5,196,220 $ 7,990,763
=========== ============
SUPPLEMENTAL DISCLOSURES:
CASH PAID DURING THE PERIOD FOR:
Interest $ 88,923 $ 51,237
=========== ============
Income taxes $ 410,000 $ 710,000
=========== ============
</TABLE>
See Notes to Consolidated Financial Statements
7
<PAGE> 8
MEDEX, INC
----------
NOTES TO CONSOLIDATED FINANCIAL
-------------------------------
STATEMENTS DECEMBER 31, 1995
----------------------------
(unaudited)
-----------
1. PRESENTATION
------------
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and include all of the
information and disclosures required by generally accepted accounting
principles for interim reporting, which are less than those required for annual
reporting. In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (all of which are normal and recurring in
nature) necessary to present fairly the financial position of Medex, Inc. at
December 31, 1995, and the results of operations and cash flows. The notes to
the Consolidated Financial Statements which are contained in the 1995 Annual
Report to Shareholders should be read in conjunction with these Consolidated
Financial Statements. Certain reclassifications have been made to prior year's
amounts to conform with the classifications of such amounts for fiscal 1996.
8
<PAGE> 9
<TABLE>
MEDEX, INC.
-----------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
DECEMBER 31, 1995
-----------------
RESULTS OF OPERATIONS
The following table shows Medex, Inc. operating results as a percent of net sales for the periods indicated for certain
items in the consolidated statements of income. Dollar amounts in the following tables are in thousands.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PERCENT OF NET SALES
--------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales 100.00% 100.00% 100.00% 100.00%
Cost of Goods Sold 51.63 57.22 50.37 55.65
------ ------ ------ ------
Gross Margin 48.37 42.78 49.63 44.35
Operating Expenses 47.66 48.35 45.08 42.41
------ ------ ------ ------
Operating Income (Loss) .71 (5.57) 4.55 1.95
Other Income .29 .71 (.05) .49
------ ------ ------ ------
Income (Loss) Before
Income Taxes .99 (4.87) 4.50 2.44
Estimated Income
Taxes (Benefit) .40 (1.97) 1.80 .97
------ ------ ------ ------
Net Income (Loss) .59% (2.90)% 2.70% 1.47%
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $23,534 $22,376 $47,231 $45,458
====================================================================================================================================
<FN>
Net sales for the three months ended December 31,1995 increased $1,158,000 or five percent over the same period of the previous
year. Net sales from domestic operations increased $545,000 or four percent to $15,884,000 while sales from the Company's European
operations increased $613,000 or nine percent to $7,650,000.
</TABLE>
9
<PAGE> 10
The increase in domestic sales consists of increases in both critical care
accessories of $213,000 and infusion systems of $332,000. Critical care
accessories sales increased due to increased sales of fluid & drug and cath lab
products partially offset by a decrease in sales of pressure monitoring
products. Sales of infusion systems increased primarily as a result of a
$915,000 increase in syringe pump sales partially offset by a decrease in sales
of large volume pumps and related disposables.
European sales increased primarily due to increases in cath lab (procedure
pack) and ambulatory pump sales and due to $160,000 of sales from Ashfield
Medical Systems, which was acquired in the third quarter of fiscal 1995.
Increased foreign currency translation rates accounted for approximately
one-half of the overall increase in European sales.
For the six months ended December 31, 1995, net sales increased $1,773,000 or
four percent over the same period of the previous year. Domestic sales
decreased $372,000 or one percent to $31,707,000 while European sales increased
$2,145,000 or 16 percent to $15,524,000.
The decrease in domestic sales occurred in both critical care accessories, down
$191,000 and infusion systems, down $181,000. The decrease in critical care
accessories primarily occurred in the fluid and drug product line due to
bulk/OEM business lost in the previous year. Infusion systems decreased as a
result of decreases in sales of large volume pumps and related disposables.
The increase in European sales for the six months is primarily due to increased
sales of cath lab (procedure pack) and pressure monitoring products along with
the Company recording $373,000 of sales from Ashfield Medical Systems.
Increased foreign currency translation rates accounted for approximately 40
percent of the increase.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cost of Goods Sold $12,152 $12,804 $23,791 $25,296
- ---------------------------------------------------------------------------------------------------------------------------------
Gross Margin $11,382 $ 9,572 $23,440 $20,162
=================================================================================================================================
</TABLE>
Gross margin as a percent of net sales for the second quarter of fiscal 1996
increased to 48.4% from the 42.8% reported in the previous year. Domestic
margins increased eight percentage points while European margins remained flat.
Domestic margins have improved due to a change in mix to include fewer large
volume pump sales, which have a lower margin, and due to lower volume related
manufacturing variances. The decrease in manufacturing variances is attributed
to increased production volumes at both the Columbus and Atlanta plants due to
the Company closing its Denver facility and moving production to these
locations.
Europe's margins have remained flat reflecting lower margins at standard due to
pricing pressures and increased costs offset by favorable volume related
manufacturing variances.
10
<PAGE> 11
On a year to date basis, the gross margin percentage increased to 49.6% from
44.4%. Domestic margins improved 7.3 percentage points while Europe's margins
improved 1.2 percentage points. These improvements were primarily caused by
the same items as noted above.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Expenses $11,216 $10,819 $21,290 $19,277
================================================================================================================================
</TABLE>
Operating expenses for the three months ended December 31, 1995 increased
$397,000 over the same period for the previous year. This increase consists of
a $223,000 decrease in domestic operating expenses and a $620,000 increase in
European operating expenses.
The domestic decrease consists of a $618,000 increase in selling, research and
administrative costs offset by a $841,000 decrease in restructuring expenses.
Selling, research and administrative costs have increased due to accruals for
the estimated costs associated with senior management changes announced during
the quarter.
Restructuring expenses in both the current and prior year relate to the closing
of the Denver facility announced in October, 1994. The closing of this
facility and the integration of all functions and product lines into the
Columbus and Atlanta operations was originally estimated to save the Company
approximately $2,500,000 annually, while costing approximately $3,200,000 to
implement. The integration was finalized during the quarter ended December 31,
1995 when the company incurred the final costs associated with the hiring and
relocation of personnel and when the facility lease was terminated.
The total cost to complete this plan was $3,709,000 consisting of $2,876,000
recognized through September, 1995 and $833,000 recognized this quarter. The
excess of the final cost of $3,709,000 over the original estimate of $3,200,000
is primarily due to costs to terminate the lease. The Company was previously
attempting to sublease the facility for which it was committed under a lease
through September, 1998. The Company had recorded the portion of the lease
costs which were expected to exceed the estimated sublease income as a
component of the restructuring costs recorded in the previous fiscal year.
During the quarter ended December 31, 1995, the Company was presented with an
opportunity to terminate the lease and remove itself of the uncertainty
associated with subletting the facility. While the costs exceeded original
estimates, management elected to terminate the lease to bring final closure to
the Denver restructuring.
European operating expenses increased $620,000 partially due to the effects of
increased foreign currency translation rates which caused $145,000 of the
increase. The remaining increase is due to increased sales and marketing and
administrative expenses to support the increased sales and due to the
acquisition of Ashfield Medical Systems which recorded $130,000 of expenses.
On a year to date basis, operating expenses increased $2,013,000 consisting of
a $627,000 increase in domestic expenses and a $1,386,000 increase in European
expenses. The increase for the six month period was primarily due to the same
items discussed above for the three month period.
11
<PAGE> 12
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Other Income $ 68 $ 159 $ (22) $ 223
_______________________________________________________________
</TABLE>
The decrease in other income for the three months ended December 31, 1995 is
primarily due to a decrease in investment income and an increase in interest
expense. Investment income has decreased due to lower investment levels while
interest expense has increased due to a reduction in the amount of interest
capitalized on construction projects.
For the six months ended December 31, 1995, the Company recorded an expense of
$22,000 versus income of $223,000 in the prior year. This change is primarily
due to a reduction in interest income and an increase in interest expense, due
to the reasons noted above, and due to a decrease in foreign currency exchange
gains. The Company recorded an $85,000 foreign currency exchange loss for the
six months ended December 31, 1995 as compared to a gain of $95,000 for the
same period in the prior year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Estimated Income
Taxes/(benefit) $ 95 $ (440) $ 852 $ 439
_______________________________________________________________
</TABLE>
Income taxes for both the current and previous fiscal year are estimated to be
40 percent of pre-tax income.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net working capital at December 31, 1995 decreased $78,000 over the working
capital at June 30, 1995. The current ratio was 3.80 to 1.00 at December 31,
1995 as compared to 4.32 to 1.00 at June 30, 1995.
Property additions of approximately $2,895,000 primarily relate to the
acquisition of machinery and equipment and dies and molds.
Management believes that currently available cash and investments, cash
provided from future operations and debt financing options will be sufficient
to finance these and other future capital expenditures.
MANAGEMENT'S OUTLOOK
- --------------------
Management anticipates that the Company will continue to post increases in
sales and profits over fiscal 1995. However, the Company remains in a
turnaround mode and management is working to position the Company for
consistent performance.
12
<PAGE> 13
PART II - OTHER INFORMATION
---------------------------
ITEM 1.
- -------
LEGAL PROCEEDINGS
- -----------------
The Company is not presently a party to any material pending legal
proceedings.
ITEM 2.
- -------
CHANGES IN SECURITIES
- ---------------------
None
ITEM 3.
- -------
DEFAULTS UPON SENIOR SECURITIES
- -------------------------------
None
ITEM 4.
- -------
SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
- -------------------------------------------------
A. Medex, Inc.'s 1995 Annual Meeting of Shareholders was held on November
15, 1995.
B. Proxies were solicited by Medex, Inc. management pursuant to
Regulation 14 under the Securities Exchange Act of 1934. There was no
solicitation in opposition to managements' nominees as listed in the
Proxy Statement and all nominees were elected pursuant to the vote of
the Shareholders.
1. The vote to elect directors was:
<TABLE>
<CAPTION>
Robert E. Boyd James L. Ginter John N. Holscher
-------------- --------------- ----------------
<S> <C> <C> <C>
For 5,076,390 5,242,990 5,239,138
Withheld 306,139 139,539 143,391
</TABLE>
The terms of office of Messrs. Helmrath, Joyce, Jordan,
Martino, Messinger and Waldbillig continued after the meeting.
C. Shareholders voted to approve the appointment of Deloitte & Touche LLP
as auditors for the year ending June 30, 1996.
1. The vote to approve Deloitte & Touche LLP as auditors was:
For 5,374,190
Against 4,452
Abstain 3,887
13
<PAGE> 14
ITEM 5.
- -------
OTHER INFORMATION
- -----------------
None
ITEM 6.
- -------
EXHIBITS AND REPORTS ON FORM 8-K
- --------------------------------
A. EXHIBITS
--------
10.1 Amended Medex, Inc. Key Employee Non Statutory Stock Option
Plan.
10.2 Amendment to Employment Agreement with Bradley P. Gould.
11. Computation of earnings per share.
B. REPORTS ON FORM 8-K
-------------------
1. A report on Form 8-K was filed on October 10, 1995 and
reported under Item 5, Other Events: that Mr. Bradley P. Gould
had been elected Chief Executive Officer of Medex, Inc.
Michael J. Barilla had been named acting Chief Financial
Officer and Kevin L. Barnett had been named Treasurer of the
Company.
2. A report on Form 8-K was filed on October 23,1995 and reported
under Items 5, Other Events; that Medex, Inc. had adopted a
Shareholder Rights Plan as described in the press release
attached as an exhibit to the Form 8-K.
14
<PAGE> 15
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
MEDEX, INC.
<TABLE>
<S> <C> <C> <C>
Date: February 13 , 1996 By: /s/Bradley P. Gould
------------------------ Bradley P. Gould
Chief Executive Officer
And:/s/Michael J. Barilla
Michael J. Barilla
Vice President
Chief Financial Officer
And:/s/Kevin L. Barnett
Kevin L. Barnett
Vice President
Treasurer and
Corporate Controller
(Principle Accounting Officer)
</TABLE>
15
<PAGE> 1
Exhibit 10.1
MEDEX, INC
KEY EMPLOYEE NONSTATUTORY STOCK OPTION PLAN
1. PURPOSE
The Medex, Inc. Key Employee Nonstatutory Stock Option Plan (the "Plan") is
intended to strengthen the ability of Medex, Inc. (the "Company"), to attract
and retain the services of knowledgeable and experienced persons who, through
their efforts and expertise, can make a significant contribution to the success
of the Company's business, and to provide additional incentive for such key
employees to continue to work for the best interests of the Company and its
stockholders through continuing ownership of its common stock, $.01 par value
("Common Stock"). Accordingly, the Company will grant to key employees (the
"Optionee") options (the "Option") to purchase shares of Common Stock of the
Company on the terms and conditions hereinafter established.
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a committee composed of three (3) members of
the Board of Directors of the Company who are not employees of the Company (the
"Committee"). The interpretation and construction by the Committee of any
provisions of the Plan or of any agreement or other matters related to the Plan
shall be final. The Committee may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem advisable. No member of
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan. The Company shall grant all Options under the
Plan by resolution of the Committee, which Options shall be evidenced by the
delivery of certificates in a form approved by the Committee. With respect to
persons subject to Section 16 of the Securities Exchange Act of 1934 ("1934
Act"), transactions under this plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent
any provisions of the Plan or actions by the Committee or participants fail to
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Committee.
3. STOCK SUBJECT TO THE PLAN
The shares to be issued under the Plan shall be made available either from
authorized but unissued shares of Common Stock of the Company or from shares of
Common Stock reacquired by the Company, including shares purchased in the open
market.
Shares issued under the Plan shall be subject to the terms, conditions and
restrictions specified in the Plan.
<PAGE> 2
Subject to the provisions of the succeeding paragraphs of this Section 3 and
Section 10, the aggregate number of shares which may be issued under the Plan
shall not exceed 1,000,000 shares.
If prior to August 28, 2001, Options issued under the Plan shall be reacquired
by the Company pursuant to the provisions hereof; such Options shall again
become available for granting under the Plan.
4. ELIGIBILITY AND GRANT OF OPTIONS
Options may be granted only to employees of the Company or its subsidiaries.
No employee shall be eligible to receive Options within one (1) year prior to
his normal retirement date. The Options issued herewith shall be
nontransferrable. No Options shall be sold, assigned, pledged, encumbered or
otherwise transferred by the Optionee. Subject to the terms and conditions of
the Plan, options may be granted to such key employees in such amounts and at
such times as the Committee shall, in its sole discretion, decide.
5. PURCHASE PRICE
The purchase price of the shares under each Option shall be the fair market
value of the stock at the time such Option is granted, determined by the "Last
Transaction" price at which shares of the Company's stock are listed in the
"NASDAQ National Market System" quotation of the over-the-counter market at
the close of business on the date of granting the Option, or if the stock was
not so traded on such date, then on the next date when the stock is regularly
traded and quoted on the "NASDAQ National Market System". The purchase price
shall be paid in full prior to the delivery of the stock.
6. LIMITATIONS ON THE RIGHT TO EXERCISE OPTIONS
Subject to the provisions of Section 7 hereof, no Options shall be exercised
unless at the time of such exercise the holder of the Options is in the
employment of the Company or one of its subsidiaries. In no event shall any
Options be exercised after the expiration of ten years from the date of
granting such Options. Options will be exercisable during such Option period
as follows:
(a) No Options shall be exercised until one year after the date of grant.
(b) At the end of one year from the date of grant, twenty percent (20%) of
the Options granted, and each year
2
<PAGE> 3
thereafter an additional twenty percent (20%), if they do not expire
under the terms of Section 7, shall be eligible to be exercised until
all the granted Options are free of this limitation.
(c) No Options shall be exercised which do not survive the expiration
provisions of Section 7 hereof.
Any option granted on or after November 15, 1995 may, by action of the
Committee, be granted with any limitation, restriction, and/or condition upon
the exercise of such option as the Committee may deem appropriate, including
the complete waiver of any limitation, restriction and/or condition on the
right to exercise (including those set forth in Sections 6 or 7 herein),
provided those limitations, restrictions and/or conditions are not in conflict
with any section other than 6 or 7 of this Plan.
7. EXPIRATION OF OPTIONS
Each year all Options granted under this Plan which become exercisable under
the provisions of Section 6 of this Plan shall be subject to expiration and
forfeiture in accordance with the provisions of this section.
(a) GOALS: Each year (except 1991 when the date shall be November 1, 1991)
prior to May 1, the Committee shall set achievement goals consisting of:
the net consolidated sales goal for the Company for the next fiscal
year; the consolidated net income goal for the Company for the next
fiscal year; and the net income goal for each of the operating
divisions of the Company, as these divisions may be determined from year
to year by the Committee. Further, the Committee achievement goals,
each year, shall identify each Optionee and the division that Optionee
shall be identified with for that year.
(b) FAILURE TO MEET THESE GOALS: Should the Company or any operating
division as defined by the Committee fail in the following fiscal
year to attain the goals established as to consolidated net income,
consolidated net sales or divisional net income as reflected on the
financial reports of the Company, then certain Options granted under
this Plan shall expire.
(c) EXPIRING OPTIONS: Of the Options becoming exercisable in any year,
forty percent (40%) shall expire if the Company fails to attain the
established goal for net income. Of the Options becoming exercisable in
any year, forty percent (40%) shall expire if the division identified
with the Options fails to attain the established goal for net income for
that division. Of
3
<PAGE> 4
the Options becoming exercisable in any year, twenty percent (20%) shall
expire if the Company fails to attain the established goal for net
sales. Further, any Option granted to a person assigned to an operating
division which fails to have a net income (make a profit) for that
fiscal year and which Option would otherwise be exercisable as provided
in Sections 6 and 7 above, shall also expire.
(d) If an Option expires under the provisions of this Section it shall,
except as provided for in Section 14, forever be forfeited as to that
Optionee.
(e) If an Option does not expire as provided in this Section, it shall
remain exercisable as otherwise provided in the other Sections of this
Plan.
Any Option granted on or after November 15, 1995 may, by action of the
Committee, be granted with such limitations, restrictions, waivers and/or
conditions as to the expiration or forfeiture of such Option as the Committee
may deem appropriate, including the complete waiver of any limitation,
restrictions and/or conditions relating to the expiration or forfeiture of such
Options, provided those limitations, restrictions, waivers and/or conditions
are not in conflict with any Section other than 6 or 7 of this Plan.
8. TERMINATION OF EMPLOYMENT
If a holder of an Option shall retire or shall cease to be employed by the
Company or by a subsidiary of the Company for any reason other than death after
Optionee shall have been continuously so employed for one year from and after
the date of granting his Option, Optionee may, but only within 90 days next
succeeding such retirement or cessation of employment, exercise his Options to
the extent that Optionee was entitled to exercise it at the date of such
retirement or cessation. Provided, however, the Committee may, at its sole
discretion, extend the period within which an Optionee who ceased to be an
employee from 90 days to a maximum of three (3) years from the date of
retirement or cessation of employment. Leaves of absence duly authorized by
the Company shall not be deemed cessation of employment. This Plan will not
confer upon a holder of Options any right with respect to continuance of
employment by the Company or by a subsidiary of the Company; nor will it
interfere in any way with his right, or his employer's right to terminate his
employment at any time.
9. DEATH OF HOLDER
In the event of the death of a holder of Options, while in the employment of
the Company or of a subsidiary of the Company or within three months after
termination of such employment, the
4
<PAGE> 5
Options shall be exercisable only within one year following such death and then
only (a) by his estate representative or by the person or persons who acquired
the right to exercise such Options by bequest or inheritance by reason of the
death of the decedent, and (b) only to the extent that Optionee was entitled to
exercise the Options at the date of his death.
10. ADJUSTMENT OF SHARES
In the event of any change as a result of recapitalization, merger,
consolidation, stock dividend, stock splits, combination or exchanges of
shares, or otherwise, in the character or amount of the Company's authorized
and outstanding capital stock prior to the exercise of an Option previously
granted, the Option, to the extent that it has not been exercised, shall
entitle the holder to purchase the number and kind of securities which Optionee
would have been entitled to receive had Optionee actually owned the stock
subject to the Option at the time of the occurrence of such change. If any
other event shall occur, prior to the exercise of an Option granted hereunder,
which shall increase or decrease the amount of capital stock outstanding and
which the Committee, in its sole discretion, shall determine equitably requires
an adjustment in the number of shares which the holders of Options should be
permitted to acquire, such adjustment as the Committee shall determine may be
made, and when so made shall be effective and binding for all purposes of the
Plan.
11. AMENDMENTS
The Committee of the Board may from time to time make such changes and
amendments to the Plan as it may deem necessary.
12. COMPANY RESPONSIBILITY
As long as any Options remain outstanding, the Company will reserve and keep
available and will seek to obtain, from any regulatory body having jurisdiction,
the requisite authority to issue and sell such number of shares of its capital
stock as shall be sufficient to satisfy the requirements of such Options. The
Company shall not be liable in the event of its inability to issue or sell
stock to any holder of Options if such issuance or sale would be unlawful, nor
shall the Company be liable if an issuance or sale to a holder is subsequently
invalidated.
13. EFFECTIVE DATES AND EXTINGUISHMENT OF RIGHTS
The Plan shall become fully effective upon its approval by the shareholders.
The date of granting an Option shall be the date of
5
<PAGE> 6
its award by resolution of the Committee and the certificate evidencing such
Option shall bear that date. Unless sooner terminated as herein provided, the
Plan shall terminate upon expiration of ten years from the date of its approval
by the shareholders.
14. ACCELERATION OF EXERCISABILITY ON CHANGE IN CONTROL
Upon a change in control of the Company, all Options theretofore granted and
not previously exercisable or previously expired by virtue of Section 7, shall
become fully exercisable to the same extent and in the same manner as if they
had become exercisable by passage of the time in accordance with the provisions
of the Plan relating to periods of exercisability.
For purposes of this Plan, a "change in control of the Company" shall mean:
(a) A change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act");
provided that, without limitation, such a change in control shall be
deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding
securities, or
(b) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof unless the election, or the
nomination for election by the Company's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period,
or
(c) The Company shall have merged into or consolidated with another
corporation, or merged another corporation into the Company, on a basis
whereby less than 50% of the total voting power of the surviving
corporation is represented by shares held by former shareholders of the
Company prior to such merger or consolidation, or
(d) The Company shall have sold substantially all of its assets to another
corporation or other entity or person.
6
<PAGE> 7
(e) Provided further, however, that any of the events described in
subparagraphs (a), (b), (c) or (d) above shall not cause the
acceleration of exercisability, described in this Section, to become
operative and there shall be no change of control if the event described
in subparagraphs (a), (b), (c) or (d) is approved by a two-thirds (2/3)
vote of the total non-employee membership of the Board of Directors of
the Company and a majority of the continuing non-employee directors (as
hereinafter defined) of the Company at the time of said vote. The term
continuing non-employee directors shall mean those members of the Board
of Directors of the Company not otherwise employed by the Company and
elected by the shareholders or otherwise appointed prior to the
occurrence of any of the events described in subparagraphs (a), (b), (c)
or (d) above.
15. PAYMENT
All payment for shares obtained by exercise of Options granted under the Plan
shall be made by payment of the amount due to the Treasurer of the Company in
cash or by delivery to the Secretary of the Company of sufficient shares of the
Company's Common Stock, properly endorsed for transfer to the Company, which
when valued at "Last Transaction" price at the close of business for the
previous day on which the stock was traded on the "NASDAQ National Market
System," will equal the payment due for those shares. Any fractional amount of
overpayment received by the Company because of receiving whole shares may be
refunded in cash by the Treasurer.
Notwithstanding any of the foregoing restrictions, any free or restricted
Options acquired under the Plan may at any time be pledged or otherwise
hypothecated to secure borrowings by the Optionee to obtain the acquisition
price to be paid by the Optionee for such shares; provided, however, that the
amount of such borrowings may not exceed the acquisition price of such shares.
7
<PAGE> 1
Exhibit 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to the original Employment Agreement, dated October 18, 1994,
between Medex, Inc. (the "Company") and Bradley P. Gould (the "Employee") is
hereby effective as of the date of execution herein.
RECITALS
--------
A. WHEREAS, Employee, who previously served as Senior Vice President of
European Operations, has recently been elected Chief Executive Officer of
the Company and the Company recognizes that Employee is a valuable
resource for the Company and the Company desires to be assured of the
continued service of Employee; and
B. WHEREAS, Employee has concerns about the continuation of his employment
and/or his status and responsibilities with the Company in the event of a
possible or threatened change in control of the Company; and
C. WHEREAS, the Company is concerned about the possible effect on Employee of
the uncertainties created by any proposed or threatened change of control,
whether approved by the Board of Directors or otherwise, and the
possibility that Employee may be approached by others with employment
opportunities.
D. WHEREAS, Employee is willing to continue to serve as Chief Executive
Officer but desires assurance that in the event of any such change in
control, regardless of its approval by the Board of Directors, he will
continue to have the responsibility and status he has earned.
THEREFORE, in consideration of the foregoing and other valuable
consideration, the parties agree to amend the original Employment Agreement as
follows:
<PAGE> 2
1. Delete Section 1(e) of the Employment Agreement.
2. All other recitals, terms and conditions as set forth in the original
Employment Agreement dated October 18, 1994, shall remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, this Agreement has been executed on the 1st day of
---------
November , 1995.
- ----------
Medex, Inc.
By: Robert E. Boyd, Jr.
-----------------------
Its: Secretary
----------------------
Bradley P. Gould,
---------------------------
Bradley P. Gould, Employee
2
<PAGE> 1
EXHIBIT 11
MEDEX, INC.
-----------
COMPUTATION OF EARNINGS PER SHARE
---------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average
common shares outstanding 6,167,157 6,132,740 6,164,091 6,131,420
Common equivalent
shares - stock options 34,436(1) 79,160(1) 35,782(1) 72,643(1)
------------ --------- ---------- ----------
Common shares and
common equivalent
shares outstanding 6,201,593 6,211,900 6,199,873 6,204,063
========= ========== ========== ==========
NET INCOME (LOSS) $ 138,876 $ (648,418) $1,275,945 $ 669,244
========= ========== ========== ==========
NET INCOME (LOSS) PER SHARE $ .02 $ (.10) $ .21 $ .11
========= ========== ========== ==========
FULLY DILUTED:
Weighted average
common shares outstanding 6,167,157 6,132,740 6,164,091 6,131,420
Common equivalent
shares - stock options 35,064(1) 90,118(1) 36,112(1) 86,911(1)
--------- ---------- --------- ---------
Common shares and
common equivalent
shares outstanding 6,202,221 6,222,858 6,200,203 6,218,331
========= ========= ========== ==========
NET INCOME (LOSS) $ 138,876 $(648,418) $1,275,945 $ 669,244
========= ========= ========== ==========
NET INCOME (LOSS) PER SHARE $ .02 $ (.10) $ .21 $ .11
========== ========= ========== ==========
</TABLE>
(1) Calculated under the Treasury Stock Method using the average price or
period-end market price of Medex stock, as applicable.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AND STATEMENTS OF INCOME FOR THE PERIOD ENDED DECEMBER
31, 1995
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 5,196,220
<SECURITIES> 0
<RECEIVABLES> 18,439,865
<ALLOWANCES> 757,000
<INVENTORY> 23,964,688
<CURRENT-ASSETS> 50,567,370
<PP&E> 60,024,136
<DEPRECIATION> 24,958,477
<TOTAL-ASSETS> 93,089,189
<CURRENT-LIABILITIES> 13,311,424
<BONDS> 3,411,008
<COMMON> 61,718
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 93,089,189
<SALES> 47,231,113
<TOTAL-REVENUES> 47,231,113
<CGS> 23,790,691
<TOTAL-COSTS> 21,290,160
<OTHER-EXPENSES> 22,317
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,127,945
<INCOME-TAX> 852,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,275,945
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
